Term Life Insurance: What Happens After?

Older couple deciding on their life insurance coverage after term life insurance expired.

Photo by Winnievinzence on Adobe Stock.

Life insurance policies fall into two main types: term life and whole life. Whole life insurance is a permanent insurance policy. Once you pay for the policy, you have it for life. Term life, on the other hand, is temporary for a specific term. So, if you were to die during that term, you would get a guaranteed death benefit payout. However, there is a big question that quite a few people have, “What happens after my term is over and I’m still here”?

How Term Life Insurance Works

The first objective you want to accomplish is to understand term insurance and how it works. As previously mentioned, term life insurance only covers the policyholder for a set period. These periods usually come in lengths of 10, 20, or 30 years. These options allow you to choose the term period that best fits your lifestyle. And if you were to pass away within your chosen term period, your beneficiary will receive your death benefit. However, should you outlive your term, there will be no payout, and you receive no return of premiums.

After Your Policy Expires

Since many young families are purchasers of term life policies to provide for their growing families should one parent pass, they may not require any more coverage once their policy expires since their dependents are all grown up. However, that may not always be the case.

Those who need further coverage have a few other options that they should consider about six months to a year before the expiration of the policy.

Purchasing a New Term Policy

Purchasing a new term policy could be an option for an individual who is still relatively young and healthy at the expiration of their policy. The premium cost could go down if you need a lower death benefit at that point in your life.

However, something to keep in mind is that insurance companies might require a medical exam for purchasing a new term policy. And, assuming you have developed some health issues or natural aging ailments, you will be hit with a rate increase.

Term Conversion

Term coverage may work at a certain point in your life. However, if you need continued coverage, converting your term life insurance policy into a permanent life insurance policy is an option. You may be able to convert some or all your coverage into a permanent insurance policy within a specific time frame.

You may select this option for a few reasons, including no medical underwriting, upgrading your coverage to fit your budget, and being able to afford end-of-life costs.

Final Expense Insurance

Unfortunately, in the United States, funeral costs can average $7,000 on the cheaper side. Therefore, a final expense may be the best option at the expiration of your term-life policy to ensure that you do not burden your family with significant end-of-life expenses. Because the final expense policy has a smaller payout, you can not view it as an income replacement.

This purchase could be a better option for older individuals because no medical exams are required to receive the coverage. However, since the insurance company is taking on more risk, you will pay higher premiums.

Ultimately, other options exist if you’ve outlived your term coverage. It remains critical to remember that life insurance and its premiums are highly contingent on age and health. So, at the end of your 30-year term, you may not be as healthy as you were when you first bought the policy. That is why it is crucial to begin speaking to your insurance agent to understand when you should start looking for other coverage.

Life Insurance Questions?

We hope that this information on what happens after term life insurance expires is useful to you.

If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.

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About Kayla Gonzalez

Kayla is a graduate of Texas A&M University and joined the Empower Brokerage marketing team in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile

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